A government agency awarded a lucrative public grant to a high-profile
charity for the homeless despite being aware of allegations of financial
mismanagement within the organisation.

Novas Scarman Group (NSG) was one of 157 organisations to apply for a share
of the government’s £9.25m Empowerment Fund, aimed at getting charitable
proposals off the ground.

On 1 April, the charity was told it had successfully qualified for the grant
along with 20 other third-sector organisations.

At the time the NSG was being investigated by the Tenant Services Authority
(TSA) over alleged financial mismanagement. The preliminary findings, dated 15
December, 2008, warned the charity ran ‘the imminent risk of being insolvent’.

Novas had also failed to file accounts for its affiliate The Scarman Trust
for the 2007-08 year. The Scarman Trust was later dissolved and absorbed into
NSG.

The department of communities and local government, which administers the
grant, said it was aware of the organisation’s troubles, but made no decision
because the final investigation findings had not yet been made.

A spokeswoman said: ‘No funding has to date been given to NSG. Before handing
over any funding, we will assure ourselves about the ability of each
organisation to deliver their commitments.’

An NSG spokeswoman said the charity was now in a ‘good financial position’.

She said: ‘It should also be pointed out that the TSA inquiry found that
there was never any misuse of public grants.

‘We have always used public money for the projects it is intended for and
will continue to do so.’